Ann: Senex completes asset portfolio review, page-66

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Cooper Energy & Senex Energy

These two mid-tier domestic gas producer/developers have projects which will increase supply of uncontracted gas to the east coast gas markets. The ACCC’s forecast gas price is $8.75-$11.00 and even under the Labor Party’s policy of the ACCC setting a “benchmark” price for gas, the ACCC has stated this is expected to be based on LNG net-back prices. In the case of Cooper Energy, its revenues are expected to grow from FY18 $67.5m to more than $300m in FY20, with production from the Sole field in the Gippsland Basin Victoria to commence in FY19, followed by its Manta development.

Senex is developing the Atlas project in Queensland, which was granted by the state government to develop gas supply for domestic users. The field is in a well-defined area surrounded by LNG export projects, so its production outlook is relatively low risk for an unconventional gas field.

Senex’s revenues are expected to grow from FY18 $73.1m to more than $200m in FY20. Our decision to own both companies is to diversify the risk of project timing and completion and to aggregate a position in the major sources of new domestic gas supply for the east coast in the near term and out to the mid-2020s. Importantly, these companies are not integrated electricity retailers nor LNG exporters, so they are not the focus of political regulatory scrutiny while they are adding to the domestic gas supply.